Big blues at IBM India

BANGALORE — In one of the largest-ever lay-off drive among global technology companies, IBM is said to have started cutting jobs globally on Wednesday, with first casualties in India.

Wral TechWire, a tech-related website, quoted IBM staffers in Bangalore as saying that “people broke down after seeing the inhuman treatment. Laptops along with the cases were confiscated, so several employees were seen crying and exiting building carrying and balancing their personal belongings with their two hands.” Unofficial estimates put the sacking number at around 1,000 in Bangalore alone.

Poor fourth-quarter results reported last month, marked by a 26 percent slump in hardware revenue, is suspected to be the main cause of layoffs. Worldwide, IBM employs 430,000 people and reports say some 13,000 jobs are likely to be cut as the tech major performs a “global rebalancing” act, termed “resource action” or RA, that could save about $1 billion in costs.

Bloodbath at STG Bangalore
Already, at one centre in Bangalore, IBM has asked about 40 people at its Systems Technology Group (STG) to leave, one person at the company told The Economic Times (ET). STG is often referred to as IBM's hardware division, according to the company's website.

According to the report, a person in Bangalore said on condition of anonymity that they were asked to surrender their official laptops and leave. “They were told STG business has been suffering financial woes. Employees across IBM India are extremely disgruntled. Several middle level executives have put in their papers in the last few weeks," the person added.

"STG Bangalore literally turned into a slaughter house today," Lee Conrad, national coordinator for Alliance@IBM, a union-backed workers group to The Economic Times in an email. "Several employees were called to a meeting and RA'd... and they were asked to vacate premises immediately. Severance package was on an average three months basic component of salary, which is like six weeks full pay," Conrad said.

RA refers to 'resource action' that IBM's managers at various units were asked to prepare for, ahead of the job cuts, according to media reports in the US. "People broke down after seeing the inhuman treatment. Laptops along with the cases were confiscated, so several employees were seen crying and exiting building carrying and balancing their personal belongings with their two hands," according to the email.

According to the union, job cuts in the Systems and Technology Group are happening because of a drop in profits and IBM's drive for $20 (Rs 1,240) earnings per share. IBM has set itself this earnings target by 2015, but analysts have questioned if this is achievable, especially after the company's latest results.

Although IBM has not confirmed the layoffs sources confirmed that hundreds of IBM staffers at its Bangalore office were asked to leave suddenly. Some of them, it is said, were given just a couple of hours notice and asked to leave behind their laptops and vacate the premises pronto, said the DNA newspaper.

IBM’s poor results lead to lay-offs
Last month IBM had agreed to sell its low-end server business for $2.3 billion to Lenovo, which had already bought company's PC business. At STG, "even people with very high rating were asked to leave. Two weeks ago they were told there would be no salary hikes this year,” the report added.

IBM reported a 5 percent drop in revenue in the December quarter versus the year-earlier period and analysts attribute a slightly higher-than-expected earnings per share for the quarter to measures including share buybacks and not growth in business. "We are hearing up to 15,000 cuts worldwide in the first quarter. We expect job cuts in the US February 26." Conrad said.

In India, IBM has a head count of over 130,000, its largest presence outside the US.

Chief financial officer Martin Schroeter told analysts in a conference call last month after the company reported its fourth quarterly decline in sales that the hardware business, which sells mainframes, servers, storage and related gear, was facing difficulties and would see job cuts.

Currently the talk among recruitment experts is that IBM may be targeting up to 2,000 job cuts in India though nobody is confirming this figure yet.

This is not the first time IBM face the challenge. In 90s, they made the biggest loss in history, but they went through it.

It's a pity that so many employees are to be laid off, including many in India, but IBM will bounce back.

For India, I guess their home grown IT industry is very limited. Without a strong social security system, the laid-off employees will face much bigger uncertainty than that we do in the West. Nevertheless, they'll get used to this kind of lay-off in the globalistion process.

By the way, is there any indication that this could be a sign of things to come in the United States. If IBM is cutting jobs worldwide and if it is looking to place parts of its business on the chopping block--it has already sold its server business to Lenovo--then you never know, this could be the beginning of a trend that catches up with the American workforce as well.

It is interesting to note the cultural difference here. Obviously, people in this part of the world expect to maintain the same job or type of job in the same company for a long period of time. The problem is the world as a whole is changing and job security isn't what it once was. Those cultures will have to evolve as they have in the past to a chanigng landscape. So I don't see it as a major problem that future generations in places like India will come to accept the changing nature of job security and stability, especially since this will mean that hiring cycles will speed up and companies are likely to hire as quickly as they lay off.

People slog everywhere. Come here to siliccon valley, folks work 12-15 hours a day and many a time weekends too. But when it comes to layoffs, it's just across the board. Indians by now should get accustomed to working in multinationals and adjust to thier culture and get rid of that " I am in and will be here for long attittude". You want outsourcing, but don't want to take wahat comes along with it.

@daleste: Thanks for your comments. Sure people will learn to find ways and get jobs here but according to another young IT professional who had yet to learn the ropes of corporate management, he was hoping to stay in IBM for many years - like the way his father stayed at the postal department for 40 years! Indian culture is very different and I am sure all those who have visited India in managerial capacity will vouch for it. SMaybe such naivete would be unheard-of in the western countries but in India, people slog and believe that hard work pays

@_hm & Frank Tu: You are right - this is reality. But you got to keep in mind that this is India and layoffs are not a run-of-the-mill kind of thing. People are more emotional here and basically polite and courteous to everyone and I guess they expect it from others – western culture or whatever.

No doubt multinational companies are cold-blooded and callous when it comes to the pink slip affair. And it just not the IT industry. I am talking in terms of publishing industry too –where one of the managing editors of Fortune (yes, the Fortune, US, magazine) as well as star reporters were just asked to leave but were given at least a week's time. Although I was so shocked, they took it in their stride, morale was low but hope was there and they found other jobs and there were some savings were there too to bank on. The US and EU countries are used to it I suppose but not India and Indian employees definitely did not expect it from a bellwether like IBM.

All those who joined IBM and have been laid off are the younger ones (minimal savings would be there, I suppose but not much). The blue-blooded ( read, OLD) IBMers who have been with IBM for generations they haven't been laid off.

I am not against lay-offs but I just feel and I am sure some others too would agree this could be done in a better way. Indian values are deeply rooted in each Indian whether he makes a show of it or not – they are inherent. And Indians are emotional too.

Moreover, India is a developing country – there is no social security, no medical insurance ( unless privately take) as GSMD has so eloquently put it.

And, believe it or not, at least 75% of the people here look after their families – in-laws and parents and extended families. Not everyone comes from affluent families – most of them fall in the upper middle-class and they take care of their families and not shunt them off to old age homes like they do in the so-called western culture. And taking care of older parents does not come cheap.I know of several IT guys who send money back home to Bhubaneswar or Nagpur (smaller cities) for the welfare of their parents and other family members. So, please do not compare lay-offs in the US to lay-offs in the Indian sub-continent unless you live here and imbibe the Indian culture and values.

Back to the laid-off IT guys.... many of them had been poached from Indian companies like Wipro where they excelled in their work. So, when such a thing happens, it comes as a shocker not only to them but to their families too.

I guess it would take time to get used to it but get used to it they will.

But it would be nice to have some modicum of courtesy for the people who had worked for you.

I have been let go three times in the last four years. My CV looks terrible and I am like a jack-of-all-trades. But the lesson I have learnt is that at every job, you need to prepare yourself for the next one. Nothing is forever.

When the writing is on the wall, dont wait to explore new horizons. Mainframes have been on their way out for a long time. When the work load is low, use the opportunity to learn new things and make your CV more attractive.

The problem is that many employees get in a comfort zone and never put themselves in a tough situation. Their day to day work becomes a routine and thats one nail in the coffin. You have to always think about the next job you want and work accordingly.

There is a cultural difference between people in Asia and American. People come and go in American companies. Layoff is another new start. These days, working for a company for life is rare, if not never. However, in Chinese and Japanese culture, people are expecting (hoping) life long employment. They dedicate their lives to the company, building their future and retirement. Time has changed. A lot of japanese companies can't do that. Neither can Chinese companies. Nonetheless, receiving the news isn't an easy thing. I don't believe anyone can get used to it. Good luck to those people.

Receiving pink slip might ruin your day. Believe it or not, giving it is not any easier. Knowing the situation, your boss might hope every move that the company is making will turn the company around to adapt to the competitive market. Otherwise, more people might let go in the near future. What could be worse it when the company is going out of business.

On the other hands, you never know what the future takes you. The end of working for the company might actually the beginniing of your bright future. The experience and knowledge that you have earned might take you to next level elsewhere. Who knows, there might be another IBM, Indian Business Machine. ;)